The Scotts Miracle-Gro company is the world's largest marketer of branded consumer lawn and garden products, with a full range of products for professional horticulture as well. Headquartered in Marysville, Ohio, the company is a market leader in a number of consumer lawn and garden and professional horticultural products. The case describes a series of decisions regarding the ownership and organization of the assets used to manufacture fertilizer spreaders. This case is intended to illustrate the application of and tradeoffs between financial, strategic and operations perspectives in a relatively straightforward manufacturing make-buy decision. The case involves a well-known, easily-described product that most students would assume is made overseas. Sufficient information is provided to roughly estimate the direct financial cost associated with internal (domestic) production, offshore (non-domestic) production and outsourced production. In addition, information is included that may be used to estimate potential transaction costs as well as costs associated with foreign exchange risk.

Learning Objective:

The case illustrates three primary teaching objectives:

to demonstrate that even simple, non-core products are not always outsourced - when all facts are considered it is not apparent that outsourcing or offshoring even a simple product such as a lawn spreader will offer substantial cost savings

an opportunity to discuss the various risks and tradeoffs associated with ownership and outsourcing of production as well as domestic and non-domestic production

to illustrate the critical importance of considering not only production and governance costs, but also changes in macroeconomic variables such as exchange rates and labor rates in international outsourcing decisions

The case may be used in several settings:

in a class on global sourcing, in which make-buy is discussed during the first few weeks of the class

a sourcing elective to help students learn how to measure total cost of ownership between two options, including easy-to-measure and hard-to-measure components

to demonstrate the difficult internal and external political issues associated with offshore outsourcing, although these are not the focus of the case as written